On December 12, 2019, U.S. Secretary of Agriculture, Sonny Perdue, announced the availability of a second round of funding under the ReConnect Program. USDA will make up to $200 million for grants, up to $200 million for 50/50 grant/loan combinations, and up to $200 million for low-interest loans. Applications for this new round of funding will be accepted beginning January 31, 2020. All applications will be due no later than April 15, 2020. To learn more, please visit the new Funding Opportunity Announcement (FOA) (PDF, 336 KB).
The ReConnect Program offers unique federal financing and funding options in the form of loans, grants, and loan/grant combinations to facilitate broadband deployment in areas of rural America that don’t currently have sufficient access to broadband, defined by the law as 10 Mbps (megabits per second) downstream and 1 Mbps upstream.
This program will generate private sector investment to deploy broadband infrastructure to provide high-speed internet e-Connectivity to as many rural premises as possible, including homes, community facilities for healthcare and public safety, schools, libraries, farms, ranches, factories, and other production sites.
Who May Apply
The entities considered eligible to apply for assistance under the ReConnect Program included:
- Cooperatives, non-profits, or mutual associations
- For-profit corporations or limited liability companies
- States, local governments, or any agency, subdivision, instrumentality, or political subdivision thereof
- A territory or possession of the United States
- An Indian tribe (as defined in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. § 450b)).
Eligible Funding Purposes
Award Funds may be used to pay for the following costs:
- To fund the construction or improvement of buildings, land, and other facilities that are required to provide broadband service.
If other services will be provided over these facilities, then award funds may also be used to acquire the additional equipment. For example, award funds may be used to purchase equipment that is required to comply with the Communications Assistance for Law Enforcement Act, 47 U.S.C. § 1001 et seq (CALEA).
- To fund reasonable pre-application expenses.
Funding for pre-application expenses may not exceed five percent of the award amount. If the funding category applied for has a grant component, then grant funds will be used for this purpose; otherwise, loan funds may be applied. All pre-application expenses must be included in the first request for award funds. These expenses may be reimbursed only if they are incurred after the publication date of this Funding Opportunity Announcement (FOA) and are properly documented. An exception to this requirement is in the case that an applicant applied for funding in round one, pre-application expenses may be eligible for reimbursement under this second round of funding if the expenses support the round two application. However, RUS reserves the right to accept or reject expenses associated with round one.
- To fund the acquisition and improvement of an existing system that is currently providing insufficient broadband service (eligible for 100 percent loan requests only).
Funding for the acquisition of an existing system may not exceed 40 percent of the award amount. After improvements are made, the upgraded system must meet the requirements of this FOA.
- To fund terrestrial-based facilities that support the provision of satellite broadband service.
Award amounts under this Funding Opportunity Announcement (FOA) will be limited as follows:
- 100 Percent Grant.
Up to $200,000,000 is available for grants. The maximum amount that can be requested in an application is $25,000,000. Applications are due to USDA by April 15, 2020.
- 50 Percent Loan / 50 Percent Grant.
Up to $200,000,000 is available for loan/grant combinations. The maximum amount that can be requested in an application is $25,000,000 for the loan and $25,000,000 for the grant. Loan and grant amounts will always be equal. Applications are due to USDA by April 15, 2020.
- 100 Percent Loan.
Up to $200,000,000 is available for loans. The maximum amount that can be requested in an application is $50,000,000. Applications are due to USDA by April 15, 2020.
See the ReConnect Program Available Funding Categories page for more information about each funding type.
Financial Feasibility and Sustainability Requirements
Only projects that USDA determines to be financially feasible and sustainable will be eligible for an award under this Funding Opportunity Announcement. An eligible project must demonstrate a positive ending cash balance as reflected on the cash flow statement for each year of the forecast period and demonstrate positive cash flow from operations in year five of the forecast period. Eligible projects must also meet at least two of the following requirements in year five of the forecast period: a minimum Times Interest Earned Ratio (TIER) requirement of 1.20, a minimum Debt Service Coverage Ratio (DSCR) requirement of 1.20 and a minimum Current Ratio of 1.20.
If an applicant has no existing debt, is not applying for any loans from this program or proposing to borrow funds from any other fund sources during the forecast period and is applying only for grant funds, only the Current Ratio will be applied and not the TIER or DSCR. For this situation, applicants must meet the minimum Current Ratio requirement of 1.20. Please contact the USDA General Field Representative in your state if you have further questions.
ReConnect Program Background – First Round of Funding
Originally authorized in 2018, the ReConnect program is used to build infrastructure for essential internet e-Connectivity services to rural areas without sufficient access to broadband, through loans and grants.
On March 23, 2018, Congress passed the Consolidated Appropriations Act, 2018 (the Act), which established a new broadband loan and grant pilot program, now called the Rural eConnectivity Pilot Program (ReConnect Program). The Act appropriated a budget authority of $600,000,000 to be used on an expedited basis. For that reason, USDA determined that it is in the public interest to move forward with developing procedures for the ReConnect Program within a Funding Opportunity Announcement (FOA) instead of rulemaking to meet the statutory mandate to implement this new program.
During the first round of funding, the application windows were open between April 23, 2019 and July 12, 2019. USDA received 146 applications requesting $1.4 billion in funding across all three ReConnect Program funding products: 100 percent loan, 100 percent grant, and loan-grant combinations. USDA is currently reviewing applications and announcing approved projects on a rolling basis. To view the announcements made to date, visit the ReConnect Program Awardees page.
The ReConnect program is a result of President Donald J. Trump’s Interagency Task Force on Agriculture and Rural Prosperity established in April 2017 to identify legislative, regulatory, and policy changes that could promote agriculture and prosperity in rural communities. In January 2018, Secretary Perdue presented the Task Force’s findings to President Trump. These findings included 31 recommendations to align the federal government with state, local and tribal governments to take advantage of opportunities that exist in rural America. Increasing investments in rural infrastructure is a key recommendation of the task force. To view the report in its entirety, please view the Report to the President of the United States from the Task Force on Agriculture and Rural Prosperity (PDF, 5.4 MB). In addition, to view the categories of the recommendations, please view the Rural Prosperity infographic (PDF, 190 KB).